Buckeye Announces First Quarter FY 2010 Results

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Net Income of $39.2 million or $1.00 per share including $35.1 million or $0.89
per share from Alternative Fuel Mixture Credits;

Sales off 20% versus Year-Ago Quarter; Up Slightly from Fourth Quarter;

Debt Reduced by a further $32.5 million to $295MMRetired all $110MM of 2010
Notes in July;

Received $7.4 million grant from State of Florida; Restarted Energy Project
MEMPHIS, Tenn.--(Business Wire)--
Buckeye Technologies Inc. (NYSE:BKI) today announced first quarter net income of
$39.2 million or $1.00 per share. First quarter earnings included net income of
$35.1 million, or $0.89 per share, from alternative fuel mixture credits earned
during the quarter. Net sales were $177 million for the first quarter of fiscal
2010 compared to a record $221 million in the first quarter of fiscal 2009.

Excluding income from alternative fuel mixture credits (AFMC), adjusted net
income was $4.1 million, or $0.11 per share versus first quarter fiscal 2008 net
income of $8.9 million, or $0.23 per share. This $0.12 per share decrease in
earnings, compared to last year, was driven by reduced operating income (-$0.17
per share after tax) due primarily to the economic downturn which has resulted
in reduced shipment volumes and in a less favorable grade mix. While overall
selling prices were lower, this was offset by lower input prices for raw
materials, chemicals, energy and transportation costs. The impact of reduced
operating income was partially offset by lower interest expense (+$0.03) and
reduced foreign exchange loss (+0.01).

Adjusted earnings of $0.11 per share, excluding the impact of the AFMC, were
$0.07 lower than the $0.18 earned in the fourth quarter. A higher effective tax
rate accounted for $0.06 of this reduction in earnings. The drop in adjusted
operating income, including a $0.01 cost relating to staffing reductions
implemented during the quarter at our Memphis cotton specialty fibers plant, was
mostly offset by lower interest expenses. Compared to the fourth quarter, sales
were up slightly as shipment volumes were up about 4% but this was offset by
lower pricing and a less favorable grade mix. Alternative fuel mixture credits
earned during the quarter, at $35.8 million net of expenses, was down by $18.4
million compared to the fourth quarter because we recognized income for the
first four and a half months of earned credits during that quarter.

Total debt declined by a further $32.5 million to $295.0 million during the
quarter, of which $8 million was due to cash generated by the alternative fuel
mixture credit, and $26 million was due to strong cash flow from operations,
including a $6 million reduction in inventory. We expect to use a portion of the
AFMC in fiscal year 2010 to offset U.S. federal estimated income tax payments
and to receive the balance in fiscal year 2011 as a cash refund after filing our
2010 tax return. The receipt of $7.4 million in grant money from the State of
Florida in support of our Foley Energy Project reduced the net cash used in
investing activities to only $1.4 million for the quarter. As of September 30,
we had $23 million of cash and $100 million in borrowing capacity on our credit
facility.

Chairman and Chief Executive Officer John B. Crowe said, "While our sales and
earnings, excluding alternative fuel mixture credits, continue to be down
significantly compared to the year ago quarter, we are encouraged that our
shipment volume has increased sequentially in each of the past two quarters. In
the just completed quarter, shipment volumes were up for both wood and cotton
specialty fibers and for nonwovens. Capacity utilization at our cotton cellulose
plants in Memphis and Americana improved over the preceding quarter, but was
still below 50% at both facilities. We further reduced staffing at our Memphis
plant during the quarter to better align staffing levels with current market
conditions. Increased demand for our high-end wood specialty fibers is expected
to yield an improved mix in the current quarter."

"The Buckeye organization remains focused on reducing cost and maintaining tight
control on working capital. We made significant progress during the quarter
toward our recently updated fiscal year-end debt goal of $275 million, reducing
our debt to $295 million during the past quarter. A key milestone for us was the
redemption of all $110MM of our 2010 notes at the end of July, which moves our
nearest term debt maturity out to July 2012 and will result in significant
interest expense savings starting in the quarter just completed."

Mr. Crowe went on to say, "Buckeye made progress on several other fronts during
the past quarter. We have restarted the energy independence project at our Foley
mill, with the help of a $7.4 MM grant from the State of Florida, which will
help us complete the project. Through September, we have spent $20MM on this
$45MM project. We are also finalizing an agreement with the University of
Florida for a pilot biorefinery facility at our Foley facility. We continue to
look for opportunities in energy and other areas to grow our revenues. While
debt reduction continues to be our highest priority, we are now in a better
position to allocate capital to high return opportunities like the energy
independence project."

Buckeye has scheduled a conference call forNovember 4, 2009 at 11:00 a.m. ET to
discuss first quarter fiscal year 2010 results. Those interested in listening by
telephone may dial in at (888) 634-7543within the United States. International
callers should dial(719) 457-2656. Supplemental material for the call will be
available on the Company`s website at www.bkitech.com or at
www.streetevents.com.

Buckeye, a leading manufacturer and marketer of specialty fibers and nonwoven
materials, is headquartered in Memphis, Tennessee, USA. The Company currently
operates facilities in the United States, Germany, Canada, and Brazil. Its
products are sold worldwide to makers of consumer and industrial goods.

Certain matters discussed in this press release may constitute forward-looking
statements within the meaning of the federal securities laws that involve risks
and uncertainties, including but not limited to economic, competitive,
governmental, and technological factors affecting the Company`s operations,
financing, markets, products, services and prices, and other factors.For further
information on factors which could impact the Company and the statements
contained herein, please refer to public filings with the Securities and
Exchange Commission.

*This release includes certain financial information not derived in accordance
with generally accepted accounting principles ("GAAP").The non-GAAP measures
used are "adjusted operating income," "adjusted net income," and "adjusted
earnings per share" and are equal to net income, operating income and earnings
per share excluding income from alternative fuel mixture credits and goodwill
impairment. The Company believes that the presentation of these non-GAAP
measures provides information that is useful to investors as it allows for a
more meaningful comparison of these financial measures to prior periods, but
this information should not be considered a substitute for any measures derived
in accordance with GAAP.The Company manages its business units by financial
measures which exclude these two items. Operating income and earnings per share
targets for our all-employee bonus and at-risk compensation also exclude the
benefit of alternative fuel mixture credits and the goodwill impairment charge.

($ in Millions) Jul-Sep Apr-Jun Jul-Sep
2009 2009 2008
Operating income
Operating income in accordance with GAAP 48.0 68.5 22.7
Alternative fuel mixture credits (35.8 ) (54.2 ) --
Adjusted operating income 12.2 14.3 22.7

Net income
Net income in accordance with GAAP 39.2 46.5 8.9
Alternative fuel mixture credits (35.1 ) (39.6 ) --
Adjusted net income 4.1 6.8 8.9

Diluted earnings per share (EPS)
EPS in accordance with GAAP $ 1.00 $ 1.20 $ 0.23
Alternative fuel mixture credits ($0.89 ) ($1.02 ) --
Adjusted EPS $ 0.11 $ 0.18 $ 0.23

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

Three Months Ended
September 30, 2009 June 30, 2009 September 30, 2008

Net sales $ 177,274 $ 176,936 $ 221,293
Cost of goods sold 153,131 149,941 185,955
Gross margin 24,143 26,995 35,338
Gross margin as a percentage of sales 13.6 % 15.3 % 16.0 %

Selling, research and administrative expenses 11,549 12,241 12,210
Amortization of intangibles and other 473 475 469
Alternative fuel mixture credits (35,842 ) (54,232 ) -

Operating income 47,963 68,511 22,659

Net interest expense and amortization of debt costs (5,289 ) (6,941 ) (7,438 )
Early extinguishment of debt 165 - -
Foreign exchange and other (100 ) 100 (831 )
Income before income taxes 42,739 61,670 14,390
Income tax expense 3,507 15,210 5,540
Net income $ 39,232 $ 46,460 $ 8,850

Earnings per share $ 1.01 $ 1.20 $ 0.23
Diluted earnings per share $ 1.00 $ 1.20 $ 0.23

Weighted average shares for basic earnings per share 38,726 38,707 38,704

Weighted average shares for diluted earnings per share 39,136 38,815 38,883

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

September 30 June 30 September 30
2009 2009 2008
Current assets:
Cash and cash equivalents $ 23,255 $ 22,061 $ 18,451
Accounts receivable, net 113,395 111,292 128,549
Income tax and alternative fuel mixture credits receivable 32,114 9,374 -
Inventories 82,861 87,637 109,211
Deferred income taxes and other 7,382 6,507 11,355
Total current assets 259,007 236,871 267,566

Property, plant and equipment, net 532,851 526,589 537,556
Goodwill 2,425 2,425 156,800
Intellectual property and other, net 26,141 26,499 28,036
Total assets $ 820,424 $ 792,384 $ 989,958

Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 28,943 $ 30,882 $ 41,618
Accrued expenses 42,922 40,804 59,248
Current portion of capital lease obligations - - 253
Short-term debt - - 285
Total current liabilities 71,865 71,686 101,404

Long-term debt 295,000 327,465 392,439
Deferred income taxes 48,961 48,399 57,754
Other liabilities 34,722 26,803 25,423
Stockholders' equity 369,876 318,031 412,938
Total liabilities and stockholders' equity $ 820,424 $ 792,384 $ 989,958

BUCKEYE TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)

Three Months Ended
September 30, 2009 June 30, 2009 September 30, 2008
OPERATING ACTIVITIES
Net income $ 39,232 $ 46,460 $ 8,850
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 11,294 11,454 12,743
Amortization 748 655 639
Loss on early extinguishment of debt (165 ) - -
Deferred income taxes 201 3,755 1,345
Loss on disposal of equipment 31 406 167
Provision for bad debts (159 ) 224 (27 )
Other (414 ) 766 391
Change in operating assets and liabilities -
Accounts receivable (201 ) 4,121 (5,125 )
Income tax and alternative fuel mixture credits receivable (22,740 ) (9,374 ) -
Inventories 5,769 15,367 (841 )
Other assets (1,400 ) (2,507 ) 142
Accounts payable and other liabilities 1,905 129 3,772
Net cash provided by operating activities 34,101 71,456 22,056

INVESTING ACTIVITIES
Purchases of property, plant & equipment (8,762 ) (8,418 ) (11,082 )
Proceeds from State of Florida grant 7,381 - -
Other (16 ) (169 ) (23 )
Net cash used in investing activities (1,397 ) (8,587 ) (11,105 )

FINANCING ACTIVITIES
Net borrowings (payments) under line of credit 77,529 (61,016 ) (1,232 )
Payments on long term debt and other (110,000 ) - (105 )
Purchase of treasury shares - - (494 )
Net proceeds from sale of equity interests 122 - -
Net cash used in financing activities (32,349 ) (61,016 ) (1,831 )

Effect of foreign currency rate fluctuations on cash 839 1,329 (1,062 )

Increase (decrease) in cash and cash equivalents 1,194 3,182 8,058
Cash and cash equivalents at beginning of period 22,061 18,879 10,393
Cash and cash equivalents at end of period $ 23,255 $ 22,061 $ 18,451

BUCKEYE TECHNOLOGIES INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(In thousands)

Three Months Ended
SEGMENT RESULTS September 30, 2009 June 30, 2009 September 30, 2008
Specialty Fibers
Net sales $ 122,159 $ 125,059 $ 164,979
Operating income (a) 8,537 11,420 20,118
Depreciation and amortization (b) 7,040 7,171 8,348
Capital expenditures 7,436 7,651 10,097

Nonwoven Materials
Net sales $ 62,728 $ 59,765 $ 65,862
Operating income (a) 5,144 4,325 3,593
Depreciation and amortization (b) 3,807 3,785 4,045
Capital expenditures 728 512 778

Corporate
Net sales $ (7,613 ) $ (7,888 ) $ (9,548 )
Operating income (loss) (a) 34,282 52,766 (1,052 )
Depreciation and amortization (b) 921 973 819
Capital expenditures 598 255 207

Total
Net sales $ 177,274 $ 176,936 $ 221,293
Operating income (loss) (a) 47,963 68,511 22,659
Depreciation and amortization (b) 11,768 11,929 13,212
Capital expenditures 8,762 8,418 11,082

(a) The corporate segment includes operating elements such as segment eliminations, amortization of intangibles, impairment of long-lived assets, alternative fuel mixture credits, charges related to restructuring, unallocated at-risk compensation and unallocated stock-based compensation for executive officers and certain other employees. Corporate net sales represents the elimination of intersegment sales included in the specialty fibers reporting segment.
(b) Depreciation and amortization includes depreciation, depletion and amortization of intangibles.

Three Months Ended
ADJUSTED EBITDA September 30, 2009 June 30, 2009 September 30, 2008

Net income (loss) $ 39,232 $ 46,460 $ 8,850
Income tax expense 3,507 15,210 5,540
Interest expense 5,067 6,764 7,233
Amortization of debt costs 269 262 262
Early extinguishment of debt (165 ) - -
Depreciation, depletion and amortization 11,767 11,929 13,212
EBITDA 59,677 80,625 35,097
Non cash charges 90 462 208
Adjusted EBITDA $ 59,767 $ 81,087 $ 35,305

We calculate EBITDA as earnings before cumulative effect of change in accounting plus interest expense, income taxes and depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by adding back the following items: asset impairment charges, non-cash charges and other (gains) losses. You should not consider adjusted EBITDA to be an alternative measure of our net income, as an indicator of operating performance; or our cash flow, as an indicator of liquidity. Adjusted EBITDA corresponds with the
definition contained in our US revolving credit facility, established on July 25, 2007, and it provides useful information concerning our ability to comply with debt covenants. Although we believe adjusted EBITDA enhances your understanding of our financial condition, this measure, when viewed individually, is not a better indicator of any trend as compared to other measures (e.g., net sales, net earnings, net cash flows, etc.).

Buckeye Technologies Inc.
Steve Dean, 901-320-8352
Senior Vice President and Chief Financial Officer
or
Investor Relations:
Daryn Abercrombie, 901-320-8908
www.bkitech.com

Copyright Business Wire 2009